Table of Contents
Chapter 1 - Introduction This will introduce the readers to the concept and jurisprudential basis of Islamic Finance. The following chapters will discuss and analyze the different products available in the market Chapter 1 - Al-Bai' Bithaman Ajil (Credit Sale) The most popular Islamic banking transaction seems to be Al-Bai' Bithaman Ajil. This is an agreement whereby a bank buys an asset or property and sells the said asset or property to a customer at an agreed defined price which the customer has to pay on a deferred basis or by periodic instalments. Chapter 2 - Bai' Salam (Advance Purchase) Bai' Salam, also known as Bai' Salaf or Bai' Mafalis, is a sale in which advance payment is made to the seller for deferred supply of goods. Chapter 3 - Istisna' (Commissioned manufacture) Bai' Salam is the deferred sale of a commodity which is not possessed by the seller and which he grows or procures for supply to the buyer on the condition of prepayment, Istisna' is a contract of sale of goods which a skilled workman commits himself to manufacture for the buyer. Chapter 4 - Ijarah (Leasing) Ijarah simply means a lease contract as well as a hire contract. In other words, the contract of Ijarah is the sale of usufruct. Chapter 5 - Mudharabah/Muqaradhah (Profit-Sharing) One of the most widely quoted operating principles in Islamic Banking is the principle of Mudharabah, sometimes known as Qirad or Muqaradhah. Chapter 6 - Musharakah (Partnership) This concept is normally translated in English as 'partnership'. Literally, Musharakah means a joint-venture agreement between two parties to engage in a specific business activity with an aim of making profit. Chapter 7 - Musharakah Mutanaqisah (Musharakah Muntahiah Bi Al-Tamlik) This is a newly developed contract by which the investor's share in a Musharakah is progressively retired or liquidated. Chapter 8 - Murabahah (Set profit sale) It is also called 'cost-plus financing' or 'financing resale of goods' and refers basically to the sale of goods at a price covering the purchase price plus a profit margin agreed upon by both parties concerned. Chapter 9 - Rahn (Pledge/security) Literally, it means to pledge, pawn or retain. Technically, it means a contract of pledging a security and becomes binding when possession of the pledge takes place.Chapter 10 - Dhaman/kafalah (Guarantee) Literally, "Dhaman" means combination i.e. the combination of responsibility and liability. Technically, the majority of Islamic Scholars define it as the combination of a responsibility with another existing responsibility. Chapter 11 - Hawalah (Assignment) Literally, Hiwalah means "to transfer" or "to shift". Technically, it means a contract that allows the debtor to transfer his debt obligation to a third party ("payer"). Chapter 12 - Qardh al-Hasan "Qard" means the loan of fungibles, and is repaid with goods of identical description, rather than with the very goods originally borrowed. Chapter 13 - Bai' Al-'Inah Bai' Al-Inah is a transaction which involves the sale and buy back of an asset by the seller. Chapter 14 - Bai' Al-Dayn Dayn in arabic term denotes the meaning of a debt. Technically, Bai'Al-Dayn means a sale and purchase transaction of a quality debt i.e. the default risk of the debtor is low, and the debt must be created from the business transaction that conforms with Shari'ah. Al-Dayn can be either monetary, or a commodity such as food or metal. Chapter 15 - Bai' Muzayadah An action by a person to sell his asset in the open market, which is followed with the process of bidding among potential buyers who would quote for a higher price. Chapter 16 - Hibah A gift awarded to a person on voluntary basis. Chapter 17 - Ibra' An act by a person to withdraw his rights i.e. his rights to collect payment from a person who has the obligation to repay the amount borrowed from him. Chapter 18 - Sukuk A document or certificate which represents the value of an asset. Chapter 19 - Ujrah/Ajr A financial charge for the utilisation of services or manfaah. Chapter 20 - Other products This chapter will discuss other products as well as new products that can be considered for the future. Chapter 21 - Conclusion
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